The end of a marriage is often complicated and emotionally taxing. Not only does a couple need to split up all of their possessions, they often have to work through child custody issues. For most people, estate planning is the last thing on their mind during a divorce is estate planning. However, divorcing couples in Texas need to consider the divorce's impact on their Wills, trusts, advanced directives, and power of attorney documents. Here are some tips on navigating divorce and estate planning in Texas.
While the Divorce is Ongoing
Update Advanced Directives: Your rights and responsibilities during a divorce differ from your legal responsibilities after the divorce is finalized. If you and your spouse are going through a divorce, your spouse may still have control over your health and financial affairs. If you become seriously ill or pass away before the divorce is finalized and your spouse is the decisionmaker on your Health Care Proxy form, then he or she still has control over your care. If you become incapacitated, your spouse will make decisions, so if this is not what you want, you should update your advanced directives immediately.
Change Your Power of Attorney: The same applies to the Power of Attorney or POA form. A POA is a legal document that gives someone else the right to handle your legal, medical, or financial affairs. Limited POAs cover specific situations, like the sale of a house, while general POAs cover a broad list of situations. A Durable POA gives the other person control of your affairs even if you become incapacitated. In other words, it doesn't end if you become seriously ill. If the person you are divorcing is your POA, they retain that power, even if you have filed for divorce. You should change your POA if you are going through a divorce.
When the Divorce is Finalized
You are officially divorced in Texas when you receive a divorce decree. The divorce decree then alters the status of your estate planning documents.
Investment Accounts and Other Pay-On-Demand Accounts: Investment accounts are generally governed by agreements wherein you name a beneficiary. However, all beneficiary designations that name your former spouse are null and void after a divorce. Even investments that have a pay-on-death or transfer-on-death designation are no longer legally operative after a divorce.
Section 123.151 of the Texas Estates Code covers this situation. It says that when a marriage is dissolved by divorce, "any payable on request after death designation provision or provision of a survivorship agreement with respect to that account in favor of the decedent's former spouse or a relative of the former spouse who is not a relative of the decedent is not effective as to that spouse or relative." There are a few exceptions to this rule. If the divorce decree "designates the former spouse or the former spouse's relative as the P.O.D. payee or beneficiary; or reaffirms the survivorship agreement or the relevant provision of the survivorship agreement in favor of the former spouse or the former spouse's relative," then the law recognizes that person as the beneficiary. Even after divorce you still have the right to make your ex a beneficiary, if you re-execute a new agreement and you reaffirm this in writing.
Living Trusts and Durable Powers of Attorney: After the divorce is final, Texas law extinguishes the rights of the ex-spouses as beneficiaries in a Living Trust, removes the ex-spouse as an Agent under Durable Powers of Attorney, and revokes their authority to make medical decisions, handle funeral arrangements, and serve as Guardians for each other. The divorce decree also nullifies trust agreements where the ex-spouse is named as the trustee.
Last Will and Testament: According to Section 123.001 of the Texas Estate Code, "If, after the testator makes a will, the testator's marriage is dissolved by divorce, annulment, or a declaration that the marriage is void, unless the will expressly provides otherwise." The law says that "all provisions in the will, including all fiduciary appointments, shall be read as if the former spouse and each relative of the former spouse who is not a relative of the testator had failed to survive the testator." The key takeaway is that your ex-spouse will not inherit anything after a divorce, even if you did not update your Will. The divorce decree takes priority over your old Will.
Update Your Texas Will After Divorce
Even though Texas law removes your former spouse as a beneficiary and heir, you should still formally revise your Will to reflect your preferences after a divorce. You can draft a new Will, update beneficiary designations, and name new Powers of Attorney with a new person as your Agent. FastWill makes it easy to revise or write a new Texas Will any time you want, from the comfort of your home.
